Osborne accused over health budget

Andy Burnham claimed the NHS is 'taking a hit' to help fund the cut in the top rate of income tax

Chancellor George Osborne has been accused by Labour of raiding the NHS budget as it emerged that planned spending by the health service has been reduced by £500 million.

The move, disclosed in Treasury figures following Wednesday's Budget, follows a £900 million underspend in 2011/12, only £400 million of which has been rolled over into the 2012/13 budget.

The Department of Health said the underspend was down to greater than expected efficiencies in capital projects, including an IT scheme, but that the coalition's commitment to increase the NHS budget in real terms was still being met.

But shadow health secretary Andy Burnham said the NHS, facing thousands of nursing job losses, was "taking a hit" to help fund the cut in the top rate of income tax for people earning more than £150,000 a year.

"This week we saw the Government's true colours: they are handing out tax cuts to millionaires and P45s to nurses," he said.

"The NHS is already suffering as the Government holds back billions to pay for their unnecessary top-down reorganisation. Now we learn the Government is making a further £500 million raid on the health budget as thousands of nursing jobs are being axed.

"The Government promised any savings would be reinvested in the NHS. Now we know the truth - the NHS front line is taking a hit to pay for tax cuts for millionaires."

Nuffield Trust chief economist Anita Charlesworth told the Health Service Journal that savings in the NHS were being used to reduce the deficit. She said: "The argument for front-loading efficiency plans was to generate money to reinvest in transforming services so that they would be sustainable in later years as the impact of constrained funding started to bite. Instead it seems that £500 million of the savings are not going to be reinvested in new models of service delivery but will instead be channelled towards central government deficit reduction."

A Department of Health spokeswoman said: "We are meeting our pledge to increase the NHS budget in real terms - we are investing an extra £12.5 billion in the NHS over the course of this Parliament. The majority of this year's underspend is from the capital budget - mainly from savings on IT systems.

"We have already transferred the maximum amount of capital budget permitted into next year and used some to fund part of £330 million for vital projects across the NHS to benefit patients. £500 million represents less than 0.5% of the total Department of Health budget."